VOLUME 14 | 2014

Managing the PipelineMetso controls inventory flow with Demand Solutions

Bill Harrison President

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Our business is built around the needs of our customers. For those that are global and need to move products between, say, Asian and North American markets, there

are added obstacles we work to resolve. Longer lead times, weeks at sea, and national and religious holidays that can close ports at either end of the journey are more than a large organization can handle on spreadsheets and whiteboards.

Furniture chains were early and sophisticated adopters of Demand Solutions, from Raymour & Flanigan on the East Coast to Steinhafels in the Midwest, and, in this issue, Tepperman’s in Canada. Accurate forecasting keeps them profitable.

Still, the degree and changing directions of globalization are a bit of a shock – it’s not simply east to west. Metso uses Demand Solutions in its valve-manufacturing plant in Massachusetts. At up to $50,000 each, these valves are not to be confused with anything you find in the kitchen department at Lowe’s. If inventory grows too large in the U.S., they check with plants near their Helsinki, Finland, headquarters or their plant in Shanghai, China, both of which will soon implement our software.

Whole Foods gets some of its high-grade meat from Applegate Farms, a customer in New Jersey, which sources grass-fed, antibiotic-free beef from suppliers in Uruguay and Australia that require orders 11 to 12 months in advance. Applegate is moving into big supermarkets such as Publix, which can send demand spiking, or not, depending on how long it takes consumers to learn about the brand and decide whether loftier price translates to loftier value.

Over the last year we have added Workflow to our DSX application, which, for example of one capability, keeps forecasts moving through the organization, with escalation when work gets delayed at one desk. We also know customers value us for the view ahead, rather than providing summaries of the past, as many accounting-oriented systems do. Our Predictive Lead Time innovation tells users exactly when they will need to order supplies or products to have them arrive for a specified date. Time has always been a key to supply chain planning; we are enhancing the way we address time issues inside the client firm and with its suppliers.

A pipe valve company and a medical supply business serving hospitals might not appear to have much in common, but Metso and ROi (Resource Optimization & Innovation here in St. Louis, Mo.) “explode” their products into components. A complex valve or a med-surg package might be made up of two or three

PRESIDENT’S LETTERunique parts plus several components they share with dozens of products. Understanding the unique and the shared components lets supply chain planners order effectively, qualifying for discounts and filling containers by seeing that one part is used in five or 10 finished products.

If you follow us, you know we opened new branch offices in 2013 throughout Europe. We expect the complexity of trade will continue to grow. As wages rise in China, some manufacturing will find new locales, such as Vietnam and Bangladesh. Expanding oil and gas supplies in the U.S. should lead to lower manufacturing costs, so some products may return to domestic production. Concerns over air pollution from container ships could lead to new fuel requirements that increase shipping costs, while growing wealth in what we are terming emerging economies will lead to new trade routes.

My personal forecast: Changes in business and trade will benefit the leading forecasting software company.

Bill HarrisonPresident | Demand Management, Inc.

WELCOME2

16DS INNOVATIONSDemand Solutions continues its history of innovation. Now available for its DSX platform: predictive lead time, business intelligence, social supply chain and workflow. It’s about being better – always.

14TEPPERMAN’SFounded in 1925, Tepperman’s, a family-owned furniture business in Canada, recently committed to its supply chain in a new way. The strategy shift has led to greater accuracy, efficiency and customer satisfaction.

12ROiROi manages the nation’s sixth largest Catholic healthcare system’s supply chain, using DS1 Forecast Management and DS1 Requirements Planning. One employee oversees 4,000 products, and ROi hits a 99.4% fill rate.

CONTENTS

6COVER STORY | METSO

METSOMetso builds valves to order, helping its customers handle unpredictable business flows. Bringing the Finland-headquartered company’s forecasting and inventory control into clear focus, is Demand Solutions.

9DRIVE PRODUCTSDrive Products shifted gear from being reactive to proactive, leaving spreadsheets behind in favor of DS1 Forecast Management. The Canada-based company is benefitting from improved planning, visibility and fill rates.

20JFEJFE Pipe Fitting, in Japan, was using a cumbersome in-house software system and a team of six planners. Now the company fluidly manages its 18,000 product lines with DS1 Advanced Planning & Scheduling.

22APPLEGATEApplegate, one of the country’s largest suppliers of antibiotic- and preservative-free organic meats, is managing incredible growth, with the help of DS1 forecasting and planning applications.

4NEWS

Editors: Adam Williams and Anne-Cécile Fuchs

WHAT’S INSIDE 3

DEMAND SOLUTIONS, PRESIDENT RANK ON MAGAZINES’ TOP 100 LISTSFor the third year in a row, Inbound Logistics magazine has named Demand Solutions to its Top 100 list for logistics IT providers. As part of the award, Demand Solutions is included in the magazine’s Logistics IT Decision Support Tool, which enables companies to search online and find providers based on needs and preferences.

Supply & Demand Chain Executive magazine also named Demand Solutions to its Top 100. The magazine’s annual awards recognize supply chain software vendors that have taken leadership positions in enhancing the supply chain function. Harrison was named a Provider Pro to Know, by the magazine, for the fourth consecutive year.

SupplyChainBrain selected Demand Solutions as a member of its 2013 list of 100 Great Supply Chain Partners. This marks the eighth year Demand Management has made SupplyChainBrain’s list. Demand Solutions was chosen from hundreds of customer-nominated trading partners. Supply chain professionals nominated vendors and service providers whose solutions have made a significant impact on their company’s efficiency, customer service, and overall supply chain performance.

“To be named to these Top 100 lists, especially for multiple years, is a tremendous honor,” says Bill Harrison, president of Demand Management. “We see it as a reflection of our intense focus on helping our customers improve the way they do business. Our smallest customers tend to grow much larger, and our larger customers find new ways of shaving days off their lead times and driving the risk out of their supply chains. We look forward to taking supply chain planning to new levels in 2014 and beyond.”

AND THE AWARD GOES TO …Demand Solutions Asia received the Asia Pacific Supply Chain Excellence Award at the 2013 SCM Logistics & Manufacturing Excellence Awards in Singapore. The honor recognizes outstanding achievements by a company that has demonstrated innovation and resilience in solving supply chain challenges, realized its corporate objectives as a result of effective supply chain management, and added business value by improving cost savings and increasing efficiency.

Demand Management continues innovating to provide its supply chain management software users with ever-expanding capabilities to succeed. The company also continues to be recognized by industry insiders for those innovations and its leadership.

NEWSNEWS4

S&OP NOW OFFERED IN DSX PLATFORMThe new Sales & Operations Planning (S&OP) module for Demand Solutions DSX software fully integrates with the solution’s Forecast Management and Requirements Planning modules.

DSX S&OP was designed to meet Gartner’s Stage 3 S&OP Architecture requirements, which call for a single technology platform that includes supply chain modeling, scenario planning, financial reconciliation, performance management, workflow, hierarchy management and collaboration.

DSX NOW OFFERS BUSINESS INTELLIGENCE, WORKFLOW AND PREDICTIVE LEAD TIMEThe Demand Solutions DSX platform now incorporates native business intelligence (BI) into its data tables to let users mine and share data efficiently across the supply chain.

DSX also offers powerful workflow capabilities. Customers can define their business processes within the system and segment users by person or role. By scheduling recurring workflows, and configuring precise exceptions and escalations, users can ensure their most critical tasks will be completed on time. DSX Workflow was named “Cool New Product of the Month” in May by Supply Chain Digest.

Demand Solutions also has released an enhanced forecasting feature – its Predictive Lead Time module – that tells users exactly when they will need to order supplies or products to have them arrive for a specified date. Despite variations of season and obstacles of global commerce, the predictive lead time feature tracks every line item of every transaction, runs the data through a forecasting engine, and generates a lead time for any item in any month of the year.

DEMAND SOLUTIONS TAKES SUPPLY CHAIN PLANNING TO THE CLOUDThe cloud-based release of Demand Solutions includes the same functionality as the on-premise platform. It is hosted remotely via the Microsoft Windows Azure cloud platform, and it is available on a subscription basis.

With its integrated supply chain planning suite, Demand Solutions enables companies to get up and running on the platform quickly and affordably.

DS BLOG LAUNCHESDemand Solutions launched its blog in June 2013 as another means of connecting with people who live and breathe the supply chain industry, just like those who are behind all the awards and innovations for which Demand Solutions, partially, is known.

Harrison asked in the first DS Blog post: “Does the world really need another supply chain blog?”

He candidly answered his own question, saying, “If it’s just another blog, probably not. But if the blog is filled with tips for helping companies lower their costs as they power our national economy, then we say, ‘Yes.’”

The DS Supply Chain Blog is an ongoing opportunity for readers to benefit from Demand Solutions’ tips, news and ideas, and to join the discussions that reach around the supply chain world. Subscribe to DS Blog for alerts to future articles.

NEWS 5

METSO6

CONTROLLING THE FLOW METSO MANAGES GROWTH WITH BETTER FORECASTING AND PLANNING

Matthew O’Connor had a problem: How do you manage demand in a business where products are built-to-order for customers operating in unpredictable, project-based

businesses like oil and gas production?

O’Connor, based in Shrewsbury, Mass., is demand manager of global operations at Metso Corporation, a €7.5 billion ($9.75 billion) company headquartered in Helsinki, Finland. Metso supplies made-to-order and assemble-to-order valves for industrial use. Some of the valves are valued at around $50,000, so solid forecasting and inventory control are of particular importance.

“Building a forecast using an ERP system while looking at historical use does not work well in rapidly changing markets,” O’Connor says. “We were forecasting from ERP, but its functionality was very limited. When using dependent demand history, you are always looking in the rearview mirror.”

Adding to this deficiency, ERP forecasting at the valve level was not an option given the build-to-order manufacturing strategy. Planning bill forecasting was possible but required significant manual maintenance. Not to mention the company’s ERP system forecast was unreliable as a result of routine batch-job failures.

“It was a part-level forecast based on historical data and it was extremely difficult to incorporate market information into the forecast,” says O’Connor. “The ERP system is talking parts while the marketing guy is talking valves, and I am looking at 24 parts in a valve. The ERP forecast adjustment process was very complicated and time consuming, and, therefore, never got done right. We wanted to develop our forecast using order intake rates at the valve-family level rather than from use history at the valve-part level.”

A valve family might have 50 to 75 configurations but many common components, such as two or three balls and a few gaskets, says Dan Kroft, a Demand Solutions consultant who works with Metso. The company’s goal was to plan the components using a family-level forecast. Using historical use data for component replenishment often resulted in them having too much of one component and not enough of another.

“With Demand Solutions, they can separate base recurring business from non-recurring project business, so you can forecast the first statistically and collaborate on the second,” says Paul Secraw,

METSO 7

another Demand Solutions consultant who works with O’Connor.

With Demand Solutions Forecast Management (FM) and Requirements Planning (RP), Metso forecasts by valve families in FM and then puts the valve forecast into RP, which breaks down the valve forecasts into part requirements.

“We then take the gross requirements on the parts and put them back into our ERP system as a part-supply forecast, and that tells the buyers and planners what to do,” O’Connor explains.

This can be especially helpful when the company receives a large unexpected order.

“If an order comes in for 600 valves, it’s not in the forecasting process but it goes into the ERP order-management module.”

To avoid throwing off the forecast in future months, O’Connor uses a filter that identifies abnormal orders.

“In my old system, I had no ability to adjust the history,” he says. “With Demand Solutions, I look at abnormal history every month and make adjustments. I get a better forecast because I can strip out these abnormalities. Future project forecasts are then manually layered in over the statistical forecast.”

MANAGING GROWTH The fast growth of oil production in North Dakota fields, far from the nearest pipeline, has increased the need for railroad tankers – and that has increased the need for valves.

“It’s safe to say we have quadrupled our business in the railroad industry,” O’Connor says. “There is no way we could have handled this dramatic growth in the old system. We would have had to wait for the history to accumulate, we’d never get ahead, and we’d have to make adjustments to the forecasts manually.”

O’Connor says there is no comparison between the pre-Demand Solutions and post-Demand Solutions forecast processes.

It took Metso about six months to implement Demand Solutions; much of the time was to organize the ERP data, which

was transferred to Demand Solutions in flat files.

In addition to using Demand Solutions for forecasting, the company is using the software to bring its inventory of slow-moving parts under control. “We decided to try using Demand Solutions RP and we did it in a week,” O’Connor says.

“The combination of Demand Solutions FM and RP gave us the platform to develop formal demand planning and inventory control processes,” he says. “The savings in air freight alone from improved forecasting have run into seven figures.”

Now the company also can identify the excess inventory, check with other offices to see if they need it in raw or machined form, and then run cost-benefit analysis to decide what to do. For 10 years Metso had discussed material review and disposition, at least annually, held meetings and put revamped processes into place.

“But because we have never had a system that allowed us to analyze, document and track all through one interface, the processes have always failed,” O’Connor says. “Now we are methodically looking at inventory items, classifying them as slow-moving, obsolete or excess. We can identify how to move them to different warehouses, create actions and follow up on them.”

O’Connor and his Demand Solutions representatives are always considering ways to use the software more intensively. For example, they recently devised a way to automate the elimination of rounding errors in the forecasts without reverting to Excel; inside Demand Solutions the process takes just 15 minutes.

And Metso plans to continue expanding its supply chain capabilities through use of Demand Solutions. The company will install the software at its Helsinki operations in 2013 and at its Shanghai plant in 2014.

“Demand Solutions gives us a far better methodology than taking our annual requirements and dividing by 12,” he adds. “We went live in March 2012 and we have been getting better every month.”

“THE COMBINATION OF

DEMAND SOLUTIONS

FM AND RP GAVE US

THE PLATFORM TO

DEVELOP FORMAL

DEMAND PLANNING AND

INVENTORY CONTROL

PROCESSES. THE SAVINGS

IN AIR FREIGHT ALONE

FROM IMPROVED

FORECASTING HAVE RUN

INTO SEVEN FIGURES.”

~ Matthew O’Connor, Metso Demand Manager, Global Operations

METSO8

DRIVING FORWARDDEMAND SOLUTIONS SMOOTHES THE ROAD FOR DRIVE PRODUCTS

If it can be mounted on a truck chassis – from dump bodies to mobile cranes, snow plows, liquid bulk loaders, hydraulic lifts and winches – Drive Products in Canada is likely to sell, install,

repair, customize or even manufacture it.

Founded in 1983 with just three employees, Drive Products is based in Mississauga, Ontario. There now are 300 people working in operations across the country, from Vancouver to Halifax, and Drive Products reaches far beyond its own branches

through distributors. Drawing on 200 approved suppliers, it offers everything from hoses and fittings to stone slingers costing in excess of $50,000 per unit.

“We have over 100 product lines,” says Mike King, the company’s purchasing manager, “and you have to have it on the shelf or could lose the sale. The small-value, high-volume products are very important, too, because without them you can’t sell the other more expensive products.”

DRIVE PRODUCTS 9

“We have vendors that require a certain amount of product for us to purchase at specific times, mainly snow equipment, in order to get cash discounts, so we are kind of held at their mercy and they don’t have return policies,” King says.

Drive Products has similar arrangements with its own distributors that qualify for better prices if they order early.

“Forecast had been done as a committee,” says King, “and they – the product managers and branch managers – would guess what the weather would be like and how truck sales would go.”

Now the company is prepared for snow, and for the range of needs it is called to meet.

Some customers buy equipment before any snow is in sight. “But we have others who show up at the door and say they need these outfits when a storm is forecast for that night, so we do stock a lot of inventory for the people who want the equipment yesterday.

“Previously, our spreadsheet did not forecast these items well because we could not bring enough history to statistically model the trends. Demand Solutions holds a little over three years of data and automatically generates forecasts with seasonality considered. Demand Solutions RP (Requirements Planning)

Until this year, Drive Products managed its forecasting on a big, custom spreadsheet, and relied heavily on the experience of its product managers and branch managers to get the right products in the right quantities to the warehouses.

“Purchasing didn’t actually purchase like in most companies,” King says. “We relied on product managers and regional or branch managers to do all the purchasing. Now the Demand Solutions software allows the purchasing department to actually do their jobs.”

The company experienced the usual problems of inadequate forecasting tools: flying in products from overseas when inventory ran short, or getting stuck with inventory that never turned over. Fortunately, Drive Products’ core products had been pretty steady, King says.

“But we have always been a reactive company instead of a proactive company. Demand Solutions is helping us, because now we can see trending before it really takes effect.”

PREPARING FOR SNOW SEASONSnow equipment, at $10 million-plus a year, is a big business for Drive Products, and it is a challenge to forecast how many plows and spreaders will be needed. But there is extra incentive to get the forecast right.

DRIVE PRODUCTS10

automatically recognizes when the season begins and recommends when we should start considering replenishment. Of course, it can never be exactly sure when it will begin snowing, but at least we can be sure that plans are being reviewed at the right time of the year.”

As Drive Products expands through acquisitions and creation of new lines of products, forecasting and inventory management have become more critical to its success.

Most of the products in inventory come from manufacturers in the United States, but a significant share comes from overseas with lead times ranging from 15 to 150 days.

As the number of product lines grows, it becomes more challenging to keep track of it all. Demand Solutions helps with the heavy lifting of planning the correct levels of inventory efficiently.

MAKING BETTER USE OF DATA“Using some of the functionality in Demand Solutions, we’ve been able to isolate the most important products in our business and to our customers,” King says, “so we focus on making sure we do a really good job planning these items. The software enables us to do a lot of analysis on the data in very short time.”

King puts the Demand Solutions applications to work after gathering 31 months of data from product lines and choosing the method of forecasting that best fits the type of demand related to each product line.

“We have just started to go through the first orders, and there is some hesitation for our branch managers,” he admits, “but change is always tough. The more we get into it, and slice and dice their database and show them the net results of what we can do, the more enthusiastic they are. We’ve had great help from our consultant and we have really been able to make this work quite well.”

EARLY RESULTS ARE PROMISINGIt’s early for results, but King has some indications of the value Drive Products will get from Demand Solutions.

“Our fill rate on customer orders is about 90 percent, but we can already see this metric

improving, which will further fortify our market share and possibly promote additional sales,” King says. “We still have some work to do on the inventory optimization, but Demand Solutions RP is realistically projecting $4 to $5 million can be taken out of our moving capital over the next 18 months.”

Demand Solutions also has led to more efficient supply chain management within the company.

“Our vendor supply review and branch transfer processes have become more efficient, as well, and managers feel much more confident about supply chain planning,” says King. “Overall we spend much less time planning, with fewer people involved, and we expect that our ability to correctly plan safety stock and increase customer order fill rates will continue to improve dramatically.”

The organization’s confidence in the results is increasing, King adds.

“We no longer need to escalate the supply plan’s validation to all the senior managers,” he says. “We’ve also been able to centralize the planning responsibility to just a few key people.

“And we are already noticing significantly improved coordination between supply and demand planning, and improved visibility to seasonality. We now have the ability to better anticipate growth and new product introductions. Our planning cycles have been drastically reduced and we are seeing improved allocation of working capital, inventory levels, and product mix within our warehouses.”

“DEMAND SOLUTIONS SOFTWARE

ALLOWS THE PURCHASING DEPARTMENT

TO ACTUALLY DO ITS JOB.”

~ Mike King, Drive Products Purchasing Manager

DRIVE PRODUCTS 11

OPTIMIZING ROi PLANNING FOR WHAT PATIENTS NEED, WHEN THEY NEED IT

When a hospital operating room needs specific supplies for a knee replacement, the surgical

team doesn’t want to hear the materials are somewhere in transit. They want the necessary supplies fully stocked for the day’s procedures. At the same time hospitals, facing tremendous pressures to reduce costs, need to keep their inventory investment low and under control.

Mercy, the nation’s sixth largest Catholic health care system, founded ROi (Resource Optimization & Innovation) to manage the supply chain for all its locations in which care is provided. The supply chain management organization has done the job so well it has added hospitals and clinics outside of Mercy as commercial partners. ROi has been using Demand Solutions Forecast Management (FM) and Requirements Planning (RP) applications to optimize inventory and service levels since the company was founded more than a decade ago.

ROi manages more than 4,000 items that are shipped to 3,500 customer locations. It achieves a 99.4 percent fill rate with only one designated employee, who spends about 60 percent of his time on demand planning and replenishment. The rest of his time is spent on other inventory management tasks like exception management, reviewing stock levels, and accounting for products.

COST CONTROL BEGINS AT HOME“The key for us is that we have been able to increase the volume that we are forecasting through Demand Solutions without significantly increasing the workforce to support it,” says Bill Lambert, senior consultant, technology, information and business solutions at ROi.

Like manufacturers and retailers, ROi faces high expectations from customers. But in the hospital supply business, pressure also comes from vendors because supplies of some products are limited.

“We run into demand fluctuations and lack of supply,” Lambert says. “Our vendors run into shortages of some items in med-surg and pharmaceuticals.”

For many of the procedural kits it delivers, ROi manufactures them at its facility in Springfield, Mo. With the use of Demand Solutions FM and RP, ROi can plan for and purchase the components needed to fulfill demand from customers.

ROi12

Ron Pittman, ROi manager of inventory management, says demand planning allows their distribution center to respond faster to changes in demand. It runs seasonality analyses and monitors for trends.

“In our business, trends or seasonal factors need to be considered in order to ensure supply is available,” he says. “Specific supplies may be needed more during certain times of the year, like during flu season, or in winter versus summer months. Demand Solutions FM allows us to easily review the forecast provided by the software algorithms, then use our judgment to make the necessary adjustments based on short-term needs like an unpredictable weather occurrence from a sudden ice storm or tornado, which happen frequently in the Midwest.”

ROi’s ability to forecast and meet demand has brought in new customers whose former suppliers weren’t able to deliver the right products on time.

“I’m not sure what could be more important,” says Scott Nelson, ROi’s chief operating officer, “than having what you need for a medical procedure. We are dealing with patients who need particular products and, unfortunately, the market has seen short-supply issues on significant

items. It is up to us to tell our suppliers what we need and make sure they can provide it. If we see demand ramping up, we can send a signal based on our forecast to ensure they have supply in the pipeline. We update them on a monthly basis.”

By sharing forecast data with suppliers, ROi can help control its inventory levels by having a more predictable demand model while assuring its ability to deliver to customers without overstocking. For many product categories, it works with a single supplier, using a sole source model while serving as a group purchasing agent for its customers.

“With our custom pack kit manufacturing, if a particular product is needed and not available from our preferred supplier, we will do whatever we need in order to secure supply,” Lambert says, “but typically we see a cost benefit staying with a preferred supplier. A benefit to them is that we have consolidated all the items we purchase.” To break apart the kits into components for ordering, ROi uses Demand Solutions RP. “We explode the bills of material into component pieces, add the independent demand from FM, and then roll up the individual items into a single order,” says Lambert.

“Some items are unique to a pack, and some items are used in every pack. Some items are offered as direct demand by itself and some are shared between pack production and independent demand,” he adds. “We have to take all these configurations into consideration when planning for material needs. We can

maximize our orders and consolidate that demand into a single order. With RP, we’re able to make the best use of truckloads and fill the space available.”

Nelson adds, “Having the correct product on the shelf in the correct quantity is critical since ROi ships product to every location overnight. Orders come in by 11 a.m. and trucks are on the road by 7 p.m.”

ALWAYS IMPROVINGNelson still sees room for enhancing ROi’s supply chain management; now the organization is looking at what it might accomplish by focusing on “the last mile” of the supply chain from the hospital dock to the patient or care giver. In general, hospitals have not spent much time on their internal supply chains. Entire groups, such as labs and operating rooms, might operate outside the supply chain because they are run by clinical departments rather than the hospital’s supply chain management team.

“We see a strong case for extending forecasting into the hospitals, which now tend to operate on a PAR replenishment or min/max model,” says Nelson, who knows that could have a major impact on a hospital’s costs.

As hospitals improve their systems and consolidate human resources, finance and supply chain functions through ERPs integrated with electronic medical records, they have opportunities to reduce costs and monitor clinical and product effectiveness and outcomes.

“DEMAND SOLUTIONS

FM ALLOWS US TO EASILY

REVIEW THE FORECAST

PROVIDED BY THE

SOFTWARE ALGORITHMS,

THEN USE OUR JUDGMENT

TO MAKE THE NECESSARY

ADJUSTMENTS BASED ON

SHORT-TERM NEEDS LIKE AN

UNPREDICTABLE WEATHER

OCCURRENCE FROM A

SUDDEN ICE STORM OR

TORNADO.”

~ Ron Pittman, ROi Manager of Inventory Management

ROi 13

GETTING COMFORTABLE TEPPERMAN’S SEES HIGHER CUSTOMER SATISFACTION IN FORECAST

A t Tepperman’s home furnishing stores in Ontario, Canada, Demand Solutions gets credit for initiating the company’s change in supply chain strategy.

“We want to be really committed to managing our inventory and increasing customer satisfaction,” says Masoud Negad, vice president of operations and supply chain. “Over the last two years, Demand Solutions was instrumental in making a shift in terms of our strategy, allowing us to be more efficient and enjoy a higher SKU fill rate.”

Founded in 1925, Tepperman’s is a third-generation, family-owned business that sells furniture, appliances and electronics, and offers its own financing. It has four store locations, three Bargain Annex

outlets and two distribution centers, all in Ontario. Its goal is to be the store where people love to do business, as expressed in its mission statement: “When we do it right, they will come back.”

If philosophical change sounds like an exaggeration, Negad explains that Tepperman’s, which has a strong marketing approach to retail, has increased its commitment to supply chain ideology. In practice, that has meant moving replenishment responsibilities from marketing to a supply chain department with expertise in forecasting and inventory management.

The first step in this transition was implementing the Demand Solutions software and committing to a higher level of in-stock inventory. This transition allowed Tepperman’s to use the ABC

TEPPERMAN’S FURNITURE14

Analysis functions within Demand Solutions to help determine which products consumers were demanding and ensure these items were available for sale. The next step was to become more accurate in forecasts and improve inventory turns.

“The next component is how to bring supply chain to a much bigger picture,” Negad adds. “We ended up shifting our strategy and we now have a dedicated supply chain team consisting of inventory planners, coordinators and a supply chain manager who report to the vice president of operations and supply chain. This has linked warehousing, distribution and customer service together so replenishing, receiving, storage, delivery and service are now part of one department.”

IMPROVED PLANNINGPrior to deploying Demand Solutions, Tepperman’s did its order planning with an internally developed Excel spreadsheet linked to its Storis ERP system. This spreadsheet captured average written sales for a 12-month period by warehouse location and then calculated an order quantity based on those averages, taking into account lead time. The marketing department would then replenish inventory by business category and the buyer and re-order buyer would manage the inventory flow for their categories. Orders were made up weekly based on an annual average.

The process led to lower than desired order fill rates and customer satisfaction problems. The company had limited tools to identify and fix forecasting problems. Ordering was unreliable and the store lacked tools to categorize best-selling items, while uneven product flows led to many peaks and valleys in its distribution center inventories.

Like many retailers, Tepperman’s gets much of its merchandise from Asia, shipped through Vancouver, Canada, and then sent by rail to distribution centers in Windsor and London, both cities in Ontario, most of the way across Canada. Asian goods take three to four months to arrive while North American products are manufactured and then delivered to distribution centers with lead times of up to eight weeks. Forecasts need to target correct quantities and delivery dates, despite the variables.

Negad says promotions still require a lot of manual work. Inventory planners look at past performance and then review pricing, in-store financing offers and seasonality to forecast anticipated demand. Once the forecast for promotions is completed, it is entered into the Demand Solutions Forecast Management system which prompts orders at the right date for delivery in time for the sale.

CHECKING FOR PLANNER BIASTepperman’s also uses Demand Solutions’ performance analysis reporting tool to check for planner bias – a tendency to order too much or too little.

“We have been tracking this for 13 months and it has been a great tool,” says Brian Kelly, supply chain manager. “Subconsciously a planner might be leaning one way and not realize it. Now a bias can be identified and an effort made to correct it.”

Tepperman’s transition to a strong role for supply chain has taken some time as inventory planners became familiar with Demand Solutions and learned to trust the forecasts.

“As a department, we have become confident with Demand Solutions, and the company’s confidence with supply chain has grown month to month,” Kelly says.

“WE WANT TO BE REALLY

COMMITTED TO MANAGING OUR

INVENTORY AND INCREASING

CUSTOMER SATISFACTION. OVER

THE LAST TWO YEARS, DEMAND

SOLUTIONS WAS INSTRUMENTAL

IN MAKING A SHIFT IN TERMS

OF OUR STRATEGY, ALLOWING

US TO BE MORE EFFICIENT AND

ENJOY A HIGHER SKU FILL RATE.”

~ Masoud Negad, Tepperman’s Vice President of Operations and Supply Chain

Supply chain work, such as inventory planning, requires very specific skills, says Negad, and those take time to develop, but the payoff is there. “Our company has seen the potential in doing this and has dedicated resources in hardware, software and human resources to make that investment.”

Now entering its third year with Demand Solutions, Tepperman’s has dialed up its use of the planning software to achieve a much higher fill rate than it had previously.

“We wanted to take advantage of all the system options available within the software,” Kelly says. “By reviewing all these options and customizing them to fit the Tepperman’s inventory strategy, we have seen customer satisfaction steadily increase as product is now available when it’s needed.”

TEPPERMAN’S FURNITURE 15

Standing still is not an option in business. That’s especially true in supply chain, which is defined by movement, and its managers’ abilities to plan which products need to move where and when. So what good are supply chain solutions if they don’t fully enable users to make those decisions, push the edge to refine processes and help trim a little more fat for even leaner operations?

In 2013, Demand Solutions continued its history of innovation by making available these features for its DSX platform: predictive lead time, business intelligence, social supply chain and workflow. Demand Solutions also now is available as a cloud-based solution.

It’s about being better – always.

OVERCOME LEAD TIME VARIABILITY WITH PREDICTIVE LEAD TIMELead time variability is an ongoing challenge for supply chain planners. The goal is to order supplies so they will arrive just in time to be used. But because lead times vary by season, this goal is difficult to achieve. The question is: How to shorten lead time so to avoid storing inventory for weeks or months? Demand Solutions’ predictive lead time module demystifies the otherwise near-impossible task of planning for variability.

Until now, there has not been a trustworthy way to manage lead time. Relying only on forecasts doesn’t get it done. Neither does making decisions based on what was true last month or last year. Those approaches leave the supply chain vulnerable to the unexpected.

“Supply chain planners used to be satisfied with any lead time as long as it was consistent,” says Bill Harrison, president of Demand Management. “But now that supply chains have gone global, lead times have lengthened and more and more variables have come into play. Predictive lead time helps supply chain planners develop much more realistic timelines for all their purchasing decisions, conserving capital and reducing storage requirements.”

Demand Solutions’ predictive lead time module helps users overcome lead time variability by tracking every line item of every transaction, running the data through a forecasting engine, and generating a lead time for any item in any month of the year. That results in the ability to make informed planning decisions that can ensure products arrive when they are needed, despite variables. For example, due to seasonal fluctuations in production, a planner now can know a particular item might require six weeks lead time for a July 1 delivery date, but only three weeks for a September 15 delivery.

Predictive lead time data can not only help shorten lead times, but also reduce risk within the supply chain. Using Demand Solutions’ predictive lead time module, a user can run sophisticated analytics on the performance of its vendors to identify unhealthy trends before they become major problems. When early warnings of trends arise, such as lengthened time-to-fill or higher rates of product defects, corrective actions can prevent potential disruptions to the supply chain.

DS INNOVATIONSDS INNOVATIONS16

FROM SUPPLY CHAIN TO VALUE CHAIN USING BUSINESS INTELLIGENCEAfter years of building valuable supply chain relationships and investing in in-house implementations of supply chain management business intelligence (SCM BI) to provide insights, there still is no guarantee an in-house system will function as it should or deliver the information its users truly need. Demand Solutions simplifies the process; it delivers native BI in its software.

Demand Solutions’ BI functionality works closely with the platform’s predictive lead time feature to provide real-time insight into what matters most to the bottom line. Overall business results can be viewed at a high level. Or, in a matter of seconds, a drill-down gives depth to the information about challenges and opportunities that are impacting the company’s business health.

In the typical manufacturing or distribution business, data resides in disconnected databases scattered across the company. Decision-makers who want to go beyond spreadsheets typically try to implement one of the many BI solutions on the market. But how can those solutions integrate with the range of supply chain databases in use for a complete, accurate view of the business?

Harrison describes how it works for a Demand Solutions platform user.

“We’ve created a multidimensional cube,” he says, “and it lets all stakeholders extract data from systems throughout the supply chain and work with that data through an intuitive web-based front end.

“Once a comprehensive view of performance is established using the native BI of the Demand Solutions platform, users can begin to reach beyond optimizing inventory levels or consolidating business with lowest-cost suppliers. They can begin to turn their supply chains into value chains.”

If a goal is to minimize supplier risk, for example, Demand Solutions allows for mining data on vendor performance to identify “red flags” in the supply chain. Decisions can be made. And the platform makes it easy to share the information with employees, partners, suppliers and customers.

To help customers get started using the BI program, Demand Solutions delivers industry-focused Foundation Analytical Packs, which are designed for the apparel, consumer packaged goods, energy, food and beverage, wholesale distribution, pharmaceutical and biotech, and general manufacturing and service parts industries. By using the appropriate analytical pack, a user can eliminate the need to employ a large IT team, build its own data cube, work to integrate it with its own supply chain planning databases, and avoid months of trial and error to identify the most relevant information.

In short, Demand Solutions’ SCM BI users leverage the best-practices experience the feature is built on, and get better results with the same resources.

DS INNOVATIONS 17

BE SOCIAL: DEMAND SOLUTIONS INTEGRATES SOCIAL MEDIA Many manufacturers’ and distributors’ businesses increasingly are becoming global. But once a company stretches around the world, communication becomes more challenging. For instance, time zone differences often mean an email sent in the morning from the U.S. isn’t read for, say, several hours by the supplier in China. That’s assuming the intended recipient is in the office the next day, that it’s not a holiday or weekend there. And the same obstacles accompany the supplier’s response back to the U.S. Never mind that deadlines loom; a simple question sent via email can take days to get an answer.

In a social supply chain, participants use today’s social platforms, rather than email, to collaborate. It helps that there’s a new generation of employees who are online around the clock. When they need information, they open a browser rather than pick up a phone. They use mobile devices to stay connected to the internet long after the traditional workday is done. By tapping into these employees’ interests and online-oriented skills, companies can increase collaboration and productivity among their supply chain stakeholders. The key is to build a social supply chain that allows users to leverage intuitive social functionality to communicate with each other in real time.

Demand Solutions makes this possible by incorporating native social functionality into its applications, through integration with Yammer, a leading enterprise social network used by 85 percent of Fortune 500 companies.

Even the most finely-tuned supply chains experience disruptions on a regular basis. To know why materials are delayed, a Demand Solutions user can see whether a particular stakeholder is online and send him a message for a speedy response. By sharing supply chain information in real time, manufacturers and distributors can eliminate barriers associated with working in vastly different time zones.

And because Yammer can automatically translate messages into a choice of 28 languages, stakeholders can easily sidestep potential language barriers with partners in the far corners of the globe.

CONTROL THE FLOW: COMPLETE CRITICAL TASKS ON TIME, EVERY TIMENo two business processes are exactly alike. Each supply chain planning solution needs to reflect the unique steps, dependencies and approvals of its particular workflow. That’s why Demand Solutions delivers robust supply chain workflow capabilities. These features go far beyond simple email to let you configure your exact processes by user and role.

Most supply chain planning solutions offer minimal workflow features that let users do little more than email an alert to a colleague from within the application. Email-based workflow typically fails to maximize productivity because it relies on people to remain available and responsive to keep business processes moving.

Demand Solution’s workflow capabilities take into account the fact that key employees are sometimes unavailable even as the most important tasks and decisions are taking place. These workflow features are based on a sophisticated scheduling system with a user interface. As a result, users can configure consistent, disciplined processes that reflect the way the company actually does business.

Stakeholders can define their exact business processes within Demand Solutions while implementing the system. The platform allows for segmenting users by person or role. This gives flexibility for assigning tasks to specific employees or to titles, such as Expediter, Analyst or Buyer, as the situation dictates.

Demand Solutions allows for scheduling recurring workflows for tasks that run at specific days and times; configuring precise exceptions that move and queue messages to the right person and role in any situation; using escalations to specify what should happen if a certain task isn’t completed within a required timeframe; and sending notifications by email or text message.

The supply chain workflow runs in the background at all times to make sure the most critical tasks are completed on time, every time.

DS INNOVATIONS18

DEMAND SOLUTIONS AIMS HIGH AND HITS THE CLOUDManufacturers and distributors want to streamline and enhance their supply chain planning processes without having to build and maintain complex IT infrastructures. Demand Management solves this by making the Demand Solutions platform available as a cloud-based supply chain management solution.

“Making Demand Solutions available as a cloud offering,” Harrison says, “removes a barrier to entry for companies that need powerful supply chain planning for great time to value.”

This cloud-based solution provides the same functionality as the on-premise version, but without requiring an up-front investment for software licenses and implementation. It is available on a subscription basis.

“Whether we’re delivering on-premise software or making solutions available through the cloud, our goal for each of our supply chain solutions is to enable our clients to achieve a reliable ROI through cost reductions and productivity enhancements,” Harrison says.

The Demand Solutions cloud-based version delivers full supply chain planning functionality in a solution that’s hosted outside the corporate firewall. This gets users up and running quickly

For more information, visit www.demandsolutions.com.

on software platforms without having to hire and train a large IT staff, and it eliminates the need to perform updates and fixes. Demand Solutions offers comprehensive, customized end-user training.

But even the world’s best cloud supply chain management system won’t be of much use if data can’t easily be moved between it and the company’s systems of record. Demand Solutions provides web services integration to help connect the Demand Solutions cloud-based version with ERP systems and other platforms.

To ensure the highest levels of reliability, the Demand Solutions cloud supply chain management version is hosted on the Windows Azure cloud platform. This platform already has let thousands of developers build, deploy and manage applications in trusted Microsoft-managed datacenters. With Windows Azure, users get a 99.95 percent monthly SLA, automatic OS and service patching, load balancing, and resiliency in the event of hardware failure.

In other words, Demand Solutions software will remain available when users need it.

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UP TO SPEED AND ON TIMEJFE HANDLES 18,000 PIPE PRODUCTS WITH ADVANCED PLANNING & SCHEDULING

Japan’s JFE Pipe Fitting Mfg. Co., Ltd., operates a complicated business. From two factories it produces 18,000

product lines for gas, water and other piping uses in industry and construction. JFE Pipe Fitting ships about 65 million units a year.

Headquartered in Osaka, Japan, JFE Pipe Fitting was using an in-house software system that had been developed in 2008 and ran on an NEC mainframe to create its monthly production plans. The company also was using an in-house system that operated on another platform to fill orders and manage its finished goods inventory.

This process required a team of six planners to take the company’s work-in-process data, plus demand data, including forecasts and actual orders, and plug the information into its order-fulfillment system. The team then synchronized the order-fulfillment data with the finished-goods inventory data held on the same system to develop its material requirement plan. After that, the material requirement plan data was linked to the company’s monthly production planning system on a mainframe to create work orders by product line.

Needless to say, that was a bulky process. Each monthly plan required five working days to develop.

“The final production plan used to be a manual process where planners took into consideration lead times based on all the various annual inputs,” says Masanori Shigi, JFE Pipe Fitting manager of business administration. “To provide customers with a delivery date on an order, planners had to manually check their inventories of work-in-process and finished goods. It was something they had to do 10 to 20 times a day.”

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“DS APS CAN SIMULATE

SEVERAL PLANS BASED

ON MULTIPLE SCENARIOS

TO SHOW THE TRADE-

OFFS AMONG ON-TIME

DELIVERY RATIO, CAPACITY

UTILIZATION RATIO AND

INVENTORY LEVEL. IT IS EASY

TO INTEGRATE WITH OUR

OTHER APPLICATIONS.”

~ Shigi

“THE RESULTS DS ADVANCED

PLANNING & SCHEDULING

DELIVERS TO PLANNERS

INCORPORATES VARIOUS

CONSTRAINTS, SUCH AS

AVAILABILITY OF MATERIALS,

WORKFORCE, JIGS,

CONSTRAINT OF LINES AND

THE SETUP TIME FOR EACH

PROCESS.”

~ Masanori Shigi, JFE Pipe Fitting Manager of Business Administration

In total, they spent several full working days each month responding to queries about delivery dates. A third system was used to plan production for the company’s pipe-nipple products. That software, running on another mainframe, had been developed more than 20 years previously and operated in isolation from the other planning systems.

“It was too old and the programs became a black box,” Shigi says. “Few planners could understand its internal logic so the company was dependent on a few individuals who had the skills to use it. Plus, it was so old it took too much time to compute the final production plan.”

Shigi turned to JFE Systems, which, like JFE Pipe Fitting, belongs to JFE Steel Corporation, to present solutions. JFE Systems introduced the production planners to Demand Solutions’ Advanced Planning & Scheduling (APS).

INTEGRATING APSShigi and Noboru Enomoto, JFE’s dispute manager of system promotion, chose Demand Solutions (DS) because it fits the company’s production schedule for process manufacturing and can automatically produce delivery dates (CTP: Capable to Promise) in response to customer inquiries. DS APS can calculate CTP by taking into consideration line capacity, work-in-process and various lead times, and do it at high speed. The results it delivers to planners incorporate various constraints, such as availability of materials, workforce, jigs, constraint of lines and the setup time for each process.

“DS APS can simulate several plans based on multiple scenarios to show the trade-offs among on-time delivery ratio, capacity utilization ratio and inventory level,” Shigi says. “Because it supports Microsoft SQL Server, it is easy to integrate with our other applications.”

Production planners get alerts if various indicators are hit at the factory, so they can make necessary adjustments as required. The Demand Solutions system also can automatically allocate factories or lines based on constraints and priorities.

Implementing DS APS at the Osaka plant took JFE Pipe Fitting about six months with Demand Solutions specialists from JFE Systems, which represents Demand Solutions in Japan. The planning software has been integrated with the manufacturer’s order fulfillment, production management and MES (Manufacturing Execution System) systems.

BOOSTING CUSTOMER SATISFACTIONThe planning team now is able to provide clients with delivery dates in real time for 80 percent of inquiries, rather than making customers wait one or two days for an answer. The goal is to increase real-time responses to 95 percent.

“The automatic delivery date pleases salespeople, because it means they and their customers can see an order will be delivered when it is needed,” Shigi says. “By collaborating with customers, sales, production managers, production planners and workshop people, we are improving reliability for each stakeholder, which will improve the company’s productivity. The relationship between salespeople and customers benefits from this real-time information sharing, and that helps us reduce emergency-shipment and air-freight costs.

“We are confident shorter delivery lead times and quicker CTP responses will lead to good customer-satisfaction survey results this year.”

And JFE’s bottom line sure won’t suffer from that.

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Applegate Farms, one of the country’s largest suppliers of antibiotic-free and organic meats doesn’t have room for error. Though its frozen breakfast sausages, chicken nuggets and chicken pot pies offer some latitude in planning, Applegate’s packaged

meats are free of preservatives, making accurate forecasting and inventory management especially key for profitability.

Applegate products are in independent grocery stores and in chains, including Whole Foods, Publix and Stop & Shop. Sales reached nearly $200 million last year and are growing 20 to 25 percent annually.

The company, with 80 employees at its headquarters in Bridgewater, N.J., sources meat from around 1,000 farms. It works with 18 co-packing companies and 12 slaughterhouses.

For grass-fed beef, Applegate imports from exporters in Australia and Uruguay that require orders a year in advance. Pork comes mostly from Canada, and supplies sometimes are limited for popular items like nitrite-free bacon.

“We look all over for meat and lean on our friends at Whole Foods to suggest areas to look,” says Heather Kantorek, Applegate’s purchasing manager. “We need farmers that have enough volume for it to be worth our buying. We need at least a truckload; it’s hard for us to work with suppliers who are too small.”

WELCOMING DEMAND SOLUTIONSKantorek was relieved when Applegate installed Demand Solutions (DS) three years ago to replace pencil, paper and Lotus Notes.

“Prior to DS we did not have a forecasting system,” she says. “We would look at weekly shipments to develop a weekly forecast every week. Then we would manually input the forecast into a Lotus Notes database that our IT department developed. The database pulled open purchase orders and physical inventory from the host system and projected an inventory run out based on the forecast. We then would need to remember the safety stock target, lead time, order increment, and minimum order quantities to determine what we needed to place purchase orders for.

FORECASTING ORGANIC GROWTH APPLEGATE BRINGS HOME THE BACON (& OTHER MEATS)

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“We were looking at history, not looking forward,” Kantorek says, “so we constantly were reacting and then scrambling to fill orders.”

The manual process was time-consuming and prone to errors, and other Applegate departments didn’t have a view of the process.

“There were no forecast roll-ups to see what we were forecasted to sell at a more aggregated level, like total sales for a given year,” she says. “There was no forecast accuracy tracking. Raw material planning was functioning separately from finished goods. Each department was working in its own silo.”

GAINING VISIBILITYWith Demand Solutions Forecast Management, Applegate is able to create customer item-level forecasts and aggregate them to an overall item-level forecast, which then is passed to Demand Solutions Requirements Planning. It stores all planning data, which eliminates the need to memorize it, which reduces purchasing errors. There also is the ability to share forecast information with other departments, and look at forecasts at a more aggregate level and in multiple units of measure.

“Now we can see seasonal spikes, and look at misses and understand why they occurred, so we know where we should focus.”

The DS forecasting tool has made the company’s monthly Sales & Operations

Planning meetings with the supply, finance, and sales and marketing teams far more productive because participants are working from the same set of numbers, and they know Kantorek regularly monitors the forecast accuracy.

“Demand Solutions helps you to be a little more sane,” she says, “because it gives you visibility into your forecasting.”

It also lets Applegate plan rather than react.

“If the raw materials group sees any one cut exceeding what they have coming, they raise it as an issue,” she says. “We work with the sales strategy managers to keep sales people informed, letting them know, for example, they temporarily shouldn’t promote a particular product if we have a supply constraint.”

Promotions lead to spikes, and Kantorek is accustomed to Applegate’s enthusiastic sales force.

“Our sales people, of course, don’t want to take their foot off the pedal,” she says. “They tend to think we will find a way to get more product. Demand Solutions enables our planning team to be accurate and clear with the information we give them in the field.”

During the monthly meetings, the collected teams review the prior month’s results, and look 12 months out and agree on a forecast.

“No one pushes back on what Demand Solutions says because Demand Solutions is smarter than any one person here.”

“THE TIME SAVINGS

COMPARED TO USING THE

MANUAL PROCESS WAS

VERY SIGNIFICANT, AND

OUR INVENTORY HOLDINGS

ARE NOW CLOSER TO OUR

TARGETS.”

~ Heather Kantorek, Applegate Purchasing Manager

FULFILLING OPPORTUNITIESNew customers to Applegate can provide challenges at first, because it is hard to predict how long it will take consumers to discover their products, which typically are priced higher than more processed products in the meat case. Applegate gives new customers a spoilage allowance but monitors orders closely. A chain like Publix could triple demand for a product once sales gear up.

“Sometimes we have to push back and ask if they want all they are ordering,” Kantorek says. “Typically, they thank us for catching an excessive order.”

Meat sales are highly seasonal, but DS allows Applegate to stay ahead of seasonal fluctuations by drawing on three years of history. New products are introduced with a sales forecast and then moved into DS once some sales history is available.

Without DS, says Kantorek, Applegate could not have kept up with its fast growth. For instance, the planning software allows the company to provide its co-packers with the data they need for their capacity planning.

“The time savings compared to using the manual process was very significant, and our inventory holdings are now closer to our targets,” Kantorek says. “Fill rates have stayed about the same even though we have grown a lot. We wouldn’t have been able to do that without Demand Solutions.”

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