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Demand planning delivers commercial certainty for Lion

Demand planning delivers commercial certainty for Lion

 

  • Results
  • Demand forecasting performance lifted to 70% per week
  • About NZ$1 million toward supply chain cost reduction targets per year
  • ≥98% DIFOT for all customers every month
  • 63% reduction in stock write-offs within one year

 

Challenges

Demand forecasting performance across the Lion New Zealand supply chain was low at 54% per week compared to best-in-class FMCG companies. “We didn’t have any sustainable systems or documentation, or the specialist expertise to transform the demand planning function. Various business units were investing in supply chain activity through external consultants,” explains Regan Hill, Activation and Customer Services Director.

Solution

Lion developed and introduced the Manufacturing Excellence (MEX) approach — supported by the TRACC Operations Best Practices. The MEX framework was introduced via a staged rollout, with five years between the first and last implementation start-ups. This gave business units the freedom to adapt certain measures to suit their own needs.

The subsequent success Lion achieved across its operations function with the rollout of the TRACC-powered approach was highly encouraging, and they decided to introduce the TRACC Planning Best Practices across their supply chain. “Another key reason over and above the success we had in operations was that TRACC allowed us to follow a more sustainable and engaging approach in-house, in line with our adopted business model,” says Regan.

The first step the Implementation Task Force (ITF) took was to recruit two demand planning specialists. In collaboration with its sister company Lion BSW Australia, and Gartner, they then searched for specialist demand software, which enabled the organisation to “buy once and deploy to both” — thus placing them in a position to fund a high-end demand management software solution (Oracle Demantra).

The use of TRACC to improve business processes like demand planning ensures a clear path to best practice, and delivers both sustainable processes and continuous improvement.

George Bearzot,
Supply Chain Director,
Lion New Zealand

 

This was followed by the implementation of the Demand Planning TRACC in order to build sustainable processes. “One key task prior to the TRACC rollout,” says Regan, “was to define how many unique supply chains we had that required different demand planning policies. Having identified six in total, this determined our demand “rules of the game” for our operational, tactical and strategic horizons for each of these supply chains.”

According to the team, the integration with TRACC was easy as the system is maturity-based and acknowledges prior learning. This integration process helped them identify gaps in their CI system and approach. The TRACC successes in the operations function also ensured visual management, which allowed the team to monitor forecast accuracy and bias weekly to determine the actions to be taken. According to Regan, the integrated approach to demand planning “supports our strategic initiative to establish a world class demand system that delivers a ‘one number forecast’ which will meet all business unit forecasting requirements”.

This work is vital to allowing our customer experience vision to flourish. Lion is easier to do business with.

Reagan Hill,
Activation and Customer
Services Director

 

demand planning
Results

Demand forecasting performance lifted to 70% per week, creating more commercial certainty for Lion New Zealand’s sales and marketing leaders to plan more effectively. This performance improvement contributed about NZ$1 million to the supply chain’s total cost reduction targets per year. The successes also saw Lion achieve its DIFOT (delivered in full on time) goals of ≥ 98% for all customers over 18 months. Stock write-offs reduced by 63% within one year — nothing short of remarkable. In addition, an annual customer survey showed an increase in performance on the key touch point of “grown stock availability with customers”.

COMPANY BACKGROUND
Lion is a market-leading food and beverage company operating in Australia and New Zealand. Lion has household name brands in beer, wine, spirits, milk, fresh dairy foods, juice, cheese and soy beverages.

 

Disclaimer
This resource has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained herein without obtaining specific professional advice. Competitive Capabilities International (CCi) does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this resource or for any decision based on it.

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