Going beyond merely replacing an outmoded production planning system at a major beverage manufacturer

Background

The client is one of the world’s biggest non-alcoholic beverage producers. Tea is processed in their UK manufacturing plant and then moved to a distribution centre nearby.

They were using an outmoded production planning system, which they knew was no longer fit for purpose. At the beginning of the one week planning cycle, forecasts were generated from BW and data extracted from spreadsheets. The outputs, themselves on spreadsheets, were then manually adjusted to take into account promotions and other exceptional ‘events.’ In fact there were several rounds of adjustments before finalisation, made more complex by the difficulty in maintaining data discipline amongst the many ‘contributors.’ Once finalised forecasts were converted into orders from the distribution plant to the manufacturing plant, upon which, the production plan was based.

What made the situation quite unsustainable was the fact that the system was obsolete, no longer supported and those who had any understanding of it, had either retired or left the company.

The Solution

The client asked Pivot to help design and implement a solution in which weekly forecasts could be combined within SAP and an agile, optimised production plan be generated. They chose Pivot because they trusted them to use their knowledge of the client, together with their business experience and deep SAP skills to deliver the right solution for them. This was to be no paper based exercise to be imposed on sceptical business users, nor a custom code solution to merely reflect the ‘as is,’ which would only recreate the problem in the future (probably at the next upgrade).

The Pivot consultants immersed themselves within the client’s business and SAP teams on site and, even within a tight schedule, took the time to understand their business and their processes in detail.

They quickly appreciated the importance of forecast accuracy and its complexity. The prices of the raw materials varied greatly by season and because the finished product was a blend of these natural raw materials, the blends had to be continually adjusted to achieve the right consistency of taste at the right cost. Timely purchasing of the right amount of the right product was and is a major contributor to company performance. Whilst buyers needed rolling 18 month forecasts, sales were providing 12 month numbers.

The Pivot consultants also identified the unnecessary historical split between the distribution and manufacturing site systems, which required manual transfer of data from one system to another. This had evolved over time, in part because the distribution site ordered finished products/specials from other sources as well. It had become the accepted norm no one ever questioned.

The new solution within SAP transformed the whole process to provide one version of the truth visible throughout the supply chain and this required the combining of the 2 sites within one system. Manual intervention was reduced to an absolute but necessary minimum and the system now responds to changing demand in real time rather than week by week in retrospect.

Utilising the functionality of SAP APO, the planners’ role is enhanced beyond measure. From mere data collection and entry workers, they have become a pro-active force in improving forecast and production planning accuracy. They now have the capability to challenge unrealistic sales optimism and even run scenarios to expose potential supply vulnerabilities so that they can be addressed ahead of time.

What’s more the client’s SAP Centre of Excellence now has a long list of enhancement ideas to get even more value from the system, together with the skills they need to implement them, e.g. the potential to generate full product costings within SAP for the first time.

Against an ambitious schedule, the Pivot/client team still managed to deliver on time and under budget. Key to this were all the hallmarks of a Pivot led project:

• Listening to the users, as well as understanding the client objectives
• Utilising standard SAP wherever possible, restricting development to the tweaking required for the real ‘special’ needs of the client
• Pro-active skill transfer, as well as thorough user training
• Doing things ahead of time where possible
• An upfront review of the client’s hardware to ensure it was appropriately sized
• Minimising/eliminating any potential disruption to working practices on the shop floor