Flavor company s&op case study
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S&OP Case Study: $325 Million North American Flavor Company Company Profile Private Fragrance and Flavor company with global operations in the US, Europe, Asia, and Latin America. More than 4000 products sold to 2500 customer locations in 64 countries used in a wide variety of food and beverage products. Challenge The Company was completing the implementation of SAP, with new processes, tools, and data sources. There was no Supply Chain organization. The Planning processes were poor. Supply and capacity planning was not being done. There were numerous service issues and late deliveries. Forecast accuracy was less than 10%. Company had high gross margins but was losing 8.5% of revenue annually due to poor service. The company desired to improve service to customers, increase growth, reduce costs, and increase business profitability. Solution A new Supply Chain organization was implemented. Sales and Operations Planning was implemented along with designing new demand planning, supply planning, and capacity planning processes. Advanced Planning software (APO) was implemented to enable demand and supply planning. With the implementation of S&OP, all business plans were integrated into one single plan. The time horizon for these plans was extended to 18 months. Demand and supply plans were reconciled at the detailed and aggregate level and linked to the operating plan. A KPI scorecard was created to monitor and communicate performance improvement. S&OP was used to execute the business plan and plan for the resources and investments needed. Results Over the next 4 years, business profitability increased by 90%. There was improved teamwork and alignment between functional areas. Other benefits realized include:
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Transcript of Flavor company s&op case study
S&OP Case Study: $325 Million North American Flavor Company
Company ProfilePrivate Fragrance and Flavor company with global operations in the US, Europe, Asia, and Latin America. More than 4000 products sold to 2500 customer locations in 64 countries used in a wide variety of food and beverage products.
ChallengeThe Company was completing the implementation of SAP, with new processes, tools, and data sources. There was no Supply Chain organization. The Planning processes were poor. Supply and capacity planning was not being done. There were numerous service issues and late deliveries. Forecast accuracy was less than 10%. Company had high gross margins but was losing 8.5% of revenue annually due to poor service. The company desired to improve service to customers, increase growth, reduce costs, and increase business profitability.
SolutionA new Supply Chain organization was implemented. Sales and Operations Planning was implemented along with designing new demand planning, supply planning, and capacity planning processes. Advanced Planning software (APO) was implemented to enable demand and supply planning. With the implementation of S&OP, all business plans were integrated into one single plan. The time horizon for these plans was extended to 18 months. Demand and supply plans were reconciled at the detailed and aggregate level and linked to the operating plan. A KPI scorecard was created to monitor and communicate performance improvement. S&OP was used to execute the business plan and plan for the resources and investments needed.
ResultsOver the next 4 years, business profitability increased by 90%. There was improved teamwork and alignment between functional areas. Other benefits realized include:
Forecast Accuracy increased by 500% Forecast bias reduced by 90% Supply Planning Accuracy increased by 30% Customer On Time Delivery increased by 26% Inventory MOH decreased by 53% Supply Chain Costs decreased by 15% ($20 MM/year) Order MOQ Compliance increased by 8% Supplier On Time Delivery increased by 20% Total Recordable Cases (TRC) decreased by 46% Lost Time Cases decreased by 87%
