This company is a major player in the Health and Beauty Aids segment of consumer packaged goods. Although they had an active S&OP process, the process was distracted by forecasts that were biased high by the Sales and Marketing functions. Since most of the products were sourced from overseas, the long lead times were a big factor in the supply uncertainty as well as in forecast bias, as a response.

We worked with the Sales Operations and the Supply Chain to develop a demand forecasting process that distinguished the need for a unit-based supply chain forecast from a dollar-driven demand plan. We designed a “Gap” process that will reconcile the supply chain forecast and the financial forecast.

The re-designed Demand and Operations Planning process was characterized by an exception approach. This resulted in a very streamlined approach to consensus demand planning and Supply chain performance:

• Introduced a mid-month communication of customer demand signals to the Supply Planning group.
• The process generated alerts for major demand shifts to demand planners and the supply chain.
• Improved customer service by 10 points.
• Improved demand forecast error by almost 40% at the item warehouse level.