The Challenge
A world leading thermal management, engineering and design company was confronted with an increase in demand volatility in their European Business Unit. The demand, that over the years had been very stable, suddenly started showing considerable swings both up and down. The company did not have a robust sales forecasting process in place to regularly review their customers’ demand, and consequently did not see the demand volatility ahead of time.
One of their main operating units was producing strictly to customer order, and the demand volatility caused lead times quoted to customers to vary considerably and become excessively long. This resulted in customers turning to their competition and the company loosing revenue.
Other operating units produced partly to stock and these operating units were confronted with excessive and obsolete inventories.
The financial planning consequently was near to impossible.
To get a grip on the situation and manage the demand volatility the company turned to ESCIMCO for implementing a Sales, Inventory and Operations Planning process (SIOP).
The Approach
As a first step ESCIMCO reviewed the business structure, the supply chains and took stock of the available and maturity of the governance processes and SIOP-elements. Based on the resulting gap-analysis ESCIMCO put a pragmatic improvement plan in place, closely involving management and employees of the company.
In the next step ESCIMCO worked out a conceptual lean sales forecasting process and shared this with Sales Management. To align and prepare various business units for the new process ESCIMCO organised SIOP-workshops in the operating units. These SIOP-workshops served as the starting point of the actual monthly SIOP-meeting cycles. During every SIOP-meeting cycle ESCIMCO added more SIOP-functionality and transferred more ownership to the company.
The Results
ESCIMCO implemented a fully functional basic SIOP process in the company over a period of 6 months. During this period a sales forecasting method was developed that combined 3 different forecasting requirements on Sales. This forecasting method freed up valuable time for Sales to focus on sales activities, and share better customer demand information.
The sales forecast provided better long term visibility of customer demand to the company. This long term visibility in combination with available production capacity allowed the company to properly assess customer requests. Consequently the company achieved a sales increase of 5.6% by securing a large customer order for a highly utilised and non-flexibel operating unit.
