After chronic Sales and Operation Planning (S&OP) failures in forecast accuracy, WGA improves a Consumer Product company’s global product portfolio forecasting accuracy by +42% while reducing expedited orders by (14%).
Problem: ±25-30% sales forecast quarterly inaccuracies over a 2 year period impacting patient commitments and reliability
Pervasive quarterly sales forecast versus actual (±25-30%) variations across multiple product lines coupled with a 42% acceleration in new products introductions created a need for leadership to improve the accuracy of Sales and Operations Planning. Existing sales forecasting process leveraged historical statistical forecast method over an 18 month period to assist sales teams with forecasting. The existing Sales and Operation Planning process relied on bi-weekly meeting with production planners at 10 plants to expedite and cut forecast orders based upon performance of make to order and make to stock products.
Approach: Identify root causes, process failure points and opportunities for improvement
WGA worked with sales team members to value stream the forecasting and planning process to identify opportunities and counter measures to improve S&OP accuracy. Client tools were evaluated to determine the sources and accuracy of data used in the forecasting process. We conducted Sales and Operation Planning process observation sessions with Sales and Supply Chain team to validate opportunities, identify root causes and process failure points.
Solution: Re-align the organization, remove process waste, and focus on culture change
We collaboratively defined an ideal and future state sales and operations planning process design. The implementation strategy included a “crawl, walk and run” approach over a six month period. New metrics designed and established to ensure time critical steps in the forecasting process were completed by sales team members. Identified existing tool changes and future state integration of long, mid and short term forecast with SAP APO to reduce inaccuracies. We developed and implemented training and change management to deploy Sales and Operation Planning improvements.
Results: Enduring business value
Within 6 months of completion of the Sales and Operation Planning initiative the client achieved and sustained:
•Firm order forecast accuracy improved to 94% vs. 62%
•Reduced expedite ordering to just 9% of total order volume vs. 23%
•18, 12, 9 and 6 month forecasting accuracy increased by 42% to 91%